Danish Govt owned IFU picks up NCDs in Satin Creditcare Network

NCD issuance would help the microfinance firm to scale up operations and expand its outreach

Investment Fund for Developing Countries (IFU), a Danish Government-owned investment fund has invested Rs 21 crore into Delhi-based microfinance institution Satin Creditcare Network Limited (SCNL) in the form of long term tier II non-convertible debentures (NCDs).

Chennai-based non-banking financial company IFMR Capital, which facilitated the issuance of NCD said that the amount was raised in the form of privately placed, unsecured, subordinated, rated, NCDs issued by SCNL for tenure of a little over 5 years.

In a statement, IFMR said that this NCD issuance will help SCNL to scale up its operations and expand its outreach to many more financially excluded households.

According to an IFMR statement, Deepa Hingorani, regional director, South Asia, IFU said, "We believe that the availability of Tier II capital to high-quality microfinance institutions like SCNL can change the landscape of lending to financially excluded households in India."

She added that MFIs can use Tier II debt to leverage on existing capital and make efficient use of this capital to expand their operations further. "Our investment was an outcome of the company's strong governance structure, financial performance plus their responsible and stable operations," she added.

Kshama Fernandes, CEO, IFMR Capital said, "This transaction is a significant milestone in the Indian microfinance space and reflects the long term confidence of the investors in SCNL. The successful completion of the Tier II placement will open the market for long term subordinated debt products for the sectors that we work in. We hope to enable many more of such Tier II issuances going forward."

H P Singh, chairman, Satin Creditcare Network Ltd said, "The NCD issuance will provide a generous boost to SCNL's growth enabling SCNL to provide financial access to a wider base of underserved individuals and enterprises. We are glad to have worked with IFMR Capital on successfully completing our first Tier II issuance."

SCNL has been one of IFMR Capital's earliest microfinance Originators and has contributed to a large number of multi originator securitisation (MOSECTM) transactions, NCDs and CBOs structured by IFMR Capital. IFMR Capital has raised over US$ 1.3 billion for its clients until date. IFMR Capital's institutional clients are active in 370 plus districts across 24 states of India, reaching over 66 lakh active borrowers.

As of March 2014, SCNL has been operating out of 199 branches in 10 states serving a client base of eight lakh and had assets under management of Rs 1.06 crore.

IFU has completed more than 100 investments in India, Sri Lanka and Bangladesh and has more than 25 years' of experience in investing in the region.